Redfin’s Housing Demand Index, which is based on Redfin customers requesting home tours and writing offers across 15 major metro areas, fell 0.6 percentage points from November (128.3) to December (127.6) — the fourth consecutive month of “virtually flat” readings.
The seasonally adjusted number of buyers requesting home tours and the number of buyers making offers decreased by 3.4 percent and 1.8 percent, respectively.
Redfin chief economist Nela Richardson says buyer demand is still strong, but that it has begun to weaken in the face of rock-bottom inventory levels.
“The housing market ended 2017 with 170,000 fewer listings than it had a year earlier, which means there were fewer homes for buyers to tour and make offers on,” said Richardson in the report. “For the fourth consecutive year, inventory will be the major factor shaping the housing market in 2018.”
Although the index was down month-over-month, demand for housing has grown by 8.4 percent year-over-year and the number of buyers requesting tours has increased by 16.7 from December 2016. But the number of buyers making offers dropped 5.9 percent year-over-year, which Richardson says is the result of a 20 percent drop in inventory — the 31st consecutive month of annual losses.
“Taken together, these numbers tell us that there were plenty of people in the market to buy a home last month, but there simply weren’t enough homes for everyone to offer on and purchase,” said the report.
At the metro level, demand in Chicago (index reading: 101), Baltimore (125), Washington D.C. (143), Seattle (198), San Francisco (93), San Diego (113), Phoenix (137) and Oakland (144) has continued to grow year-over-year, while demand in Denver (106), Boston (125), Orange County (134) and Los Angeles (119) has dropped from December 2016.
Only Portland (113) remained unchanged.
About the index
The Redfin Demand Index is adjusted for Redfin’s market share growth. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015. The index is based on the following 15 metros: Atlanta, Georgia; Austin, Texas; Baltimore, Maryland; Boston, Massachusetts; Chicago, Illinois; Denver, Colorado; Los Angeles, California; Oakland, California; Orange County, California; Phoenix, Arizona; Portland, Oregon; San Diego, California; San Francisco, California; Seattle, Washington; and Washington, D.C.